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© 2013 CorVel Corporation. All rights reserved.
Pharmacy Dispensing ChannelsPhysician Dispensing and Other Channels, Plus Their Impact on Cost and Exposure
© 2013 CorVel Corporation. All rights reserved.
Pharmacy exposures and drivers,
including Physician Dispensing
Benefits and limits of PBMs
Solutions
Agenda
© 2013 CorVel Corporation. All rights reserved.
Workers’ Comp Pharmacy Costs
© 2013 CorVel Corporation. All rights reserved.
Impact*19% of work comp medical spend, over life of claim
Physician dispensing* 28% of total pharmacy spend nationally
Narcotics*25% of total pharmacy spend
Discounts or utilization?60% of prescriptions are managed prospectively
Pharmacy Statistics
*Source: NCCI
© 2013 CorVel Corporation. All rights reserved.
Known and expected
Price
Utilization
Extreme utilization (dependence & addiction)
Extending employer exposure
Addiction and third party liability
Addiction and reputational risk
Pharmacy Exposure
© 2013 CorVel Corporation. All rights reserved.
© 2013 CorVel Corporation. All rights reserved.
Brand vs. generic
More expensive drugs
State fee schedule rates
Physician dispensing and repackaging
Price Drivers
© 2013 CorVel Corporation. All rights reserved.
Drug Pricing Varies by State
State Rx Fee Schedule Calculation Price
Texas AWP + 25% + $4 $66.24
Arkansas AWP + 0% + $5.13 $54.93
Florida AWP + 0% + $4.18 $53.98
Indiana AWP (no fee schedule) $49.80
New York AWP - 20% + $5 $44.84
California MediCal + $7.25 $12.65
60 pills of Tramadol (generic) 50 MG at AWP$.83 x 60 pills = $49.80
© 2013 CorVel Corporation. All rights reserved.
Increase in Physician Dispensing
© 2011 CorVel Corporation.
© 2013 CorVel Corporation. All rights reserved.
States with no regs to eliminate repack premium:
• FL = 62% from 43%
• MD = 47% from 36%
• PA = 27% from 15%
States with regs to eliminate repack premium:
• CA = 52% from 55% (2007 reg LTE)
• GA = 48% from 32% (2011 reg original NDC)
• IL = 63% from 22% (2012 reg original NDC)
Physician DispensingDriving Costs & Growing (2010-2011 from 2007-2008)
Source: * WCRI Physician Dispensing in Workers’ Compensation July 2012
© 2013 CorVel Corporation. All rights reserved.
Physician Marketing
Point-of-care dispensing
Setup and supplies
Repackaging
Collections
Inventory tracking
© 2013 CorVel Corporation. All rights reserved.
What is the profit potential to my practice?
If your practice is using the Nations Pharmaceuticals dispensing system by promoting it to all patients and encouraging use of the program, the profit potential can be significant. As with any program, utilization is the key. For a single physician practice seeing 30 patients per day the average annual income range is between $70,000-$125,000. Workers compensation costs and profit margins vary by state and will produce much higher margins.
http://www.nationspharm.com/faqs.html
What is being marketed to your physicians (who all need to make a living)
© 2013 CorVel Corporation. All rights reserved.
Price Difference: Tramadol
* Percent of mark-up measured against original manufacturers’ AWP
Tramadol 50 MG Manufacturer/ Labeler
AWP Price per Pill
AWP Price - 60 Pills
Package Size Dispensed Mark-up*
00093-0058-05 Teva USA $ .83 $ 49.80 500 60 0%
65162-0627-50 Amneal $ .83 $ 49.80 500 60 0%
36329-2868-02 Bryant Ranch $1.61 $ 96.60 60 60 194%
33261-0105-60 Aidarex Pharm $1.62 $ 97.20 60 60 195%
42549-0527-60 Stat Rx USA $1.66 $ 99.60 60 60 200%
55045-2928-09 DRX $1.55 $ 93.00 60 60 187%
60760-0377-60 St. Mary’s $1.41 $ 84.60 60 60 170%
66336-0915-60 Dispensing Solutions $1.55 $ 93.00 60 60 187%
© 2013 CorVel Corporation. All rights reserved.
Physician Dispensed / Repackaging Docs and Third Party Vendors
14
Provider Scripts % Scripts Charges % ChargesRec.
Payments% Rec.
PaymentsPrescription Partners 277 1.6% $124,073 3.5% $108,483 4.3%Chartwell Pennsylvania 53 0.3% $32,078 0.9% $21,387 0.8%Stoneriver Pharmacy Solutions 65 0.4% $19,589 0.6% $19,004 0.8%Claim One, LLC 107 0.6% $17,413 0.5% $16,330 0.6%BottomLine Medical Solutions, LLC 59 0.3% $15,455 0.4% $15,419 0.6%Infectious Disease Associates, P.C. 38 0.2% $14,516 0.4% $14,418 0.6%SHERMAN-WEBER, SOFIA 38 0.2% $14,516 0.4% $14,417 0.6%MedX Sales Ltd 15 0.1% $8,932 0.3% $8,932 0.4%Physician Dispensing Solutions 48 0.3% $8,400 0.2% $6,479 0.3%Industrial Pharmacy Management 40 0.2% $7,037 0.2% $6,242 0.2%
The following is a listing of the top sources of physician dispensed prescriptions and repackaging sourcesfor calendar year 2012.
© 2013 CorVel Corporation. All rights reserved.
Overall health of US population
Big Pharma advertising and marketing
“Fix me” – Public demand for an instant fix
Doctor shopping leading to multiple prescribers
Easy access to black market via internet to sell
prescription meds
Utilization Drivers
© 2013 CorVel Corporation. All rights reserved.
Everybody wants the quick fix Easier to treat pain than address function
© 2011 CorVel Corporation.
627% Increase
296% Increase
National Vital Statics System, multiple cause of death data set and DEA ARCOS system, 2007 opioid sales figure is preliminary
© 2013 CorVel Corporation. All rights reserved.
Increased prescribing of addictive narcotics
Lack of resources to manage
Lack of data integration for timely identification
Physician dispensing rising
Growth of alternative pharmacies
Third party retail billers
Over-reliance on PBMs
Dependence & Addiction Drivers
© 2013 CorVel Corporation. All rights reserved.
Narcotic use and abuse is a growing concern in Work Comp
© 2011 CorVel Corporation.
Source: WCRI data from Oct. 1, 2008 – Sept. 30, 2009 claims, with fills thru March 31, 2011
© 2013 CorVel Corporation. All rights reserved.
OxyContin®
Moved from the #3 to #1 most prescribed
workers’ compensation drug in 2009.
Description: a controlled-release narcotic
painkiller prescribed for around-the-clock relief of
moderate to severe pain.
#1 Workers’ Compensation Prescription
Source: 2011 NCCI Prescription Drug Study
© 2013 CorVel Corporation. All rights reserved.
The longer the use, the more the risk Use trends vary widely by state
© 2011 CorVel Corporation.
Source: WCRI data from Oct. 1, 2008 – Sept. 30, 2009 claims, with fills thru March 31, 2011
Figure A Percentage of Nonsurgical Claims with Narcotics That Were Identified as Longer-Term Users of Narcotics,a 2009/2011
Figure A Percentage of Nonsurgical Claims with Narcotics That Were Identified as Longer-Term Users of Narcotics,a 2009/2011
© 2013 CorVel Corporation. All rights reserved.
Delayed return to work
Fatal overdoses = death benefit
Non-fatal overdoes = long term care
How many of my claimants are addicts?
Expected Outcomes of Addicted Claimants
© 2013 CorVel Corporation. All rights reserved.
How many could be your claimants? What is your exposure?
© 2011 CorVel Corporation.
627% Increase
296% Increase
National Vital Statics System, multiple cause of death data set and DEA ARCOS system, 2007 opioid sales figure is preliminary
© 2013 CorVel Corporation. All rights reserved.
National Vital Statics System, multiple cause of death data set and DEA ARCOS system,
Drug Overdose Death Rate
© 2013 CorVel Corporation. All rights reserved.
December 2011, PA appellate court upheld death benefit
The Heffernan Decision
The DecisionIn December 2011, PA appellate court upheld death benefit.
U/R ruling. No more Dr. Rodriguez!
Mr. Heffernan suffered chronic pain from a compensable 2002 lower back injury.At some point between 2002 – 2007, he became addicted to his pain meds.
June 2007
© 2013 CorVel Corporation. All rights reserved.
December 2011, PA appellate court upheld death benefit
The Heffernan Decision
The DecisionIn December 2011, PA appellate court upheld death benefit.
U/R ruling. No more Dr. Rodriguez!
10 amDr. R appt.
Need new script for pain meds
Mr. Heffernan suffered chronic pain from a compensable 2002 lower back injury.At some point between 2002 – 2007, he became addicted to his pain meds.
June 2007
© 2013 CorVel Corporation. All rights reserved.
December 2011, PA appellate court upheld death benefit
The Heffernan Decision
The DecisionIn December 2011, PA appellate court upheld death benefit.
U/R ruling. No more Dr. Rodriguez!
10 amDr. R appt.
Need new script for pain meds
Call Dr. R at his home #.
OMG – meds denied!
Mr. Heffernan suffered chronic pain from a compensable 2002 lower back injury.At some point between 2002 – 2007, he became addicted to his pain meds.
June 2007
© 2013 CorVel Corporation. All rights reserved.
December 2011, PA appellate court upheld death benefit
The Heffernan Decision
The DecisionIn December 2011, PA appellate court upheld death benefit.
U/R ruling. No more Dr. Rodriguez!
10 amDr. R appt.
Need new script for pain meds
Call Dr. R at his home #.
8:30 amAppt. w/ Dr. R’s sister, Daisy
OMG – meds denied! I need my meds!
Mr. Heffernan suffered chronic pain from a compensable 2002 lower back injury.At some point between 2002 – 2007, he became addicted to his pain meds.
June 2007
© 2013 CorVel Corporation. All rights reserved.
December 2011, PA appellate court upheld death benefit
The Heffernan Decision
The DecisionIn December 2011, PA appellate court upheld death benefit.
U/R ruling. No more Dr. Rodriguez!
10 amDr. R appt.
Need new script for pain meds
Call Dr. R at his home #.
8:30 amAppt. w/ Dr. R’s sister, Daisy
OMG – meds denied! I need my meds!
WHERE ARE THEY!
Mr. Heffernan suffered chronic pain from a compensable 2002 lower back injury.At some point between 2002 – 2007, he became addicted to his pain meds.
June 2007
© 2013 CorVel Corporation. All rights reserved.
December 2011, PA appellate court upheld death benefit
The Heffernan Decision
The DecisionIn December 2011, PA appellate court upheld death benefit.
U/R ruling. No more Dr. Rodriguez!
10 amDr. R appt.
Need new script for pain meds
Call Dr. R at his home #.
8:30 amAppt. w/ Dr. R’s sister, Daisy
OMG – meds denied! I need my meds!
WHERE ARE THEY!
Fed Ex here Thank God!
Mr. Heffernan suffered chronic pain from a compensable 2002 lower back injury.At some point between 2002 – 2007, he became addicted to his pain meds.
June 2007
© 2013 CorVel Corporation. All rights reserved.
It does not matter if fatal dose would have been denied by U/R
Employer has a duty/responsibility to take care of the addicted claimant
Extension of employer liability
http://www.leagle.com/xmlResult.aspx?xmldoc=In%20PACO%2020111202462.xml&docbase=CSLWAR3-2007-CURR
The Appellate Court’s rationale
© 2013 CorVel Corporation. All rights reserved.
Courts do not hesitate to extend employer liability
Will courts extend employer liability beyond comp
for torts committed by their addicted employees
under the influence of prescription meds?
Plaintiff attorneys are on constant look-out for the
next wave of opportunity
Potential impact of decision and underlying rationale
© 2013 CorVel Corporation. All rights reserved.
You might have to defend your company
Drug addicts causing mayhem is big news
Potential exposure:
No statutory limits to third party liability
Damage to company’s reputation/brand
One claim can do a lot of damage
What does this mean for my company?
© 2013 CorVel Corporation. All rights reserved.
© 2013 CorVel Corporation. All rights reserved.
Prospective Management of Drug Dispensing
What Your PBM Can Do
© 2013 CorVel Corporation. All rights reserved.
Drive transactions to prospective management
First fill and dynamic eligibility
Pharmacy ID cards
Manage the transactions (formulary and DUR)
Back-end management
Convert paper bills, if available
Broaden PBM definition to include retro 3rd party bills
The Role of the PBM
© 2013 CorVel Corporation. All rights reserved.
Total Exposure Management
But what about the transactions the
PBM does not see?
PBMs are losing traction every year
© 2013 CorVel Corporation. All rights reserved.
Dispensing Channels
100% Visibility to all Rx Transactions
© 2013 CorVel Corporation. All rights reserved.
Dispensing Channels – PBM Visibility
Limited Visibility
© 2013 CorVel Corporation. All rights reserved.
Penetration Math
© 2013 CorVel Corporation. All rights reserved.
Why is data aggregation important?
© 2013 CorVel Corporation. All rights reserved.
Total Exposure Management
Solutions
© 2013 CorVel Corporation. All rights reserved.
1) Drive PBM penetration
2) Manage physician and non-traditional dispensing
3) Manage narcotic/opioids with risk profiling and clinical resources
Data Visibility and Resources
© 2013 CorVel Corporation. All rights reserved.
Solution 1: Drive PBM Penetration
Required Elements Results
Timely, actionable and 100% visibility to the Rx data Accurately measure and drive penetration
Dedicated resources More prospective transactions through PBM
Leverage over third party billers Aggressive but fair handling of third party bills
Defensible process
© 2013 CorVel Corporation. All rights reserved.
Solution 1: Drive PBM Penetration
Required Elements Results
Timely, actionable and 100% visibility to the Rx data Accurately measure and drive penetration
Dedicated resources More prospective transactions through PBM
Leverage over third party billers Aggressive but fair handling of third party bills
Defensible process
© 2013 CorVel Corporation. All rights reserved.
Solution 2: Manage Physicians
Required Elements Results
Timely, actionable and 100% visibility to the Rx data Identify and categorize dispensing MDs
Dedicated resources Reduce dispensing MDs, reduce costs
Education and leverage over providers Protect employee health and welfare
Reasonable process to maintain provider relationships Preserve provider relationships
© 2013 CorVel Corporation. All rights reserved.
Solution 2: Manage Physicians
Required Elements Results
Timely, actionable and 100% visibility to the Rx data Identify and categorize dispensing MDs
Dedicated resources Reduce dispensing MDs, reduce costs
Education and leverage over providers Protect employee health and welfare
Reasonable process to maintain provider relationships Preserve provider relationships
© 2013 CorVel Corporation. All rights reserved.
© 2013 CorVel Corporation. All rights reserved.
Solution 3: Manage Narcotics
Required Elements Results
Timely, actionable and 100% visibility to the Rx data Appropriate drug therapy plan
Clinical profiling technology Healthier and safer employees
Education and leverage over providers Reduce pharmacy and total claims costs
Dedicated resources (peer to peer) Manage exposure and risk
Reasonable process to maintain provider relationships
© 2013 CorVel Corporation. All rights reserved.
Solution 3: Manage Narcotics
Required Elements Results
Timely, actionable and 100% visibility to the Rx data Appropriate drug therapy plan
Clinical profiling technology Healthier and safer employees
Education and leverage over providers Reduce pharmacy and total claims costs
Dedicated resources (peer to peer) Manage exposure and risk
Reasonable process to maintain provider relationships
© 2013 CorVel Corporation. All rights reserved.
© 2013 CorVel Corporation. All rights reserved.
Pharmacy exposure continues to increase, and. . . your exposure goes far beyond cost
PBMs are critical for managing your exposure, but. . . they have limits
Better integration yields better results
Summary
© 2013 CorVel Corporation. All rights reserved.
1) Dedicate resources
2) Aggregate your Rx data
3) Risk-score all of your claimants
4) Educate and apply strategic leverage to manage physician prescribers
To do’s:
© 2013 CorVel Corporation. All rights reserved.
Today’s Presenter
Matt EngelsVice President, Network Solutions
CorVel Corporation
(630) 874-7343 office
(773) 255-9479 cell